Back
January 8, 2026

EUR/USD Falls Below 1.1700 After Strong US ISM Services; SMA Levels Now Key

EUR/USD snapshot — US data lifts the dollar, euro under pressure

The euro dropped below the 1.1700 threshold after the US ISM Services PMI for December topped forecasts and modest December hiring reinforced dollar strength (DXY ~98.73). At the same time, Eurozone HICP hit the ECB's 2% target while underlying inflation measures remain slightly elevated and German retail sales disappointed — a mix that is keeping market participants cautious on the euro. That dynamic aligns with recent coverage on the USD strength from ISM.

Macro drivers

US side

The surprise in the ISM Services print has renewed speculation that US data can remain resilient early in 2026. Stronger services activity and steady hiring increase the odds that the Federal Reserve will remain cautious about easing, supporting the dollar and creating headwinds for EUR/USD.

Eurozone side

Headline HICP reaching 2% is a milestone for the ECB, but the persistence of underlying inflation and weak German retail sales leaves the growth/inflation balance fragile. Additional weak macro releases (confidence, PPI, retail) could extend euro underperformance.

Technical picture

Short‑term momentum is bearish: RSI on the intraday/short-term charts is below 50 and EUR/USD has broken the 1.1700 level. Key technical levels to watch are:

Support

  • 100-day SMA: 1.1663
  • 50-day SMA: 1.1640
  • 200-day SMA: 1.1561

Resistance / bullish pivots

  • 20-day SMA: ~1.1733 (near-term short-term pivot)
  • 1.1750 — a short-term supply zone
  • 1.1800 — level where bullish resumption could be confirmed

Trade setups and opportunities

Short-on-rally (primary tactical setup)

Bias: Short-term bearish. Look for controlled short entries on failed rallies up toward the 20‑day SMA / 1.1730–1.1750 zone with targets at the 100‑day SMA (1.1663), then the 50‑day SMA (1.1640), and finally the 200‑day SMA (1.1561) if momentum accelerates. Place protective stops above the 20‑day SMA (~1.1733) or above 1.1800 depending on risk appetite.

Long reversal (secondary scenario)

Bias flip: If EUR/USD clears 1.1750–1.1800 on improving Eurozone data or a marked softening in US prints, consider long reversal trades targeting intraday resistance and previous structure highs. Confirm with RSI rising above 50 and volume/support indicators before committing size.

Risk management and catalysts to monitor

Upside risks to the short bias include better‑than‑expected Eurozone releases (confidence, PPI) or a sudden risk‑on surge that weakens the dollar. Downside risks include further US surprises that keep the DXY bid. Given the proximity to the 100‑ and 200‑day SMAs, traders should expect periods of choppy price action and use tight sizes and well‑defined stops.

How automation and data‑driven rules can help

Automated trading systems can help execute timely short‑on‑rally or momentum continuation strategies with consistent risk controls. For forex traders who want to capture these intraday moves while enforcing entry/exit discipline, a forex trading bot or a strategy managed by the trade assistant can maintain defined stop levels and scale entries against SMA targets. Even traders focused on crypto trading or cross‑asset pairs benefit from rules-based automated trading to remove emotion and enforce position sizing rules.

Practical checklist before trading EUR/USD

  • Confirm the catalyst: watch next US data prints and any Eurozone releases for confirmation.
  • Use the 20‑day SMA as your invalidation pivot for short setups (stop placement).
  • Size positions so that a move to the 200‑day SMA remains within acceptable drawdown limits.
  • Monitor volatility and liquidity around major New York and London sessions.

Conclusion

EUR/USD is in a short‑term bearish phase after stronger US ISM Services data and mixed Eurozone signals. The most actionable plan for short‑term traders is to look for short entries on rallies toward the 20‑day SMA / 1.1730–1.1750 area with disciplined stops above the 20‑day SMA and layered targets at 1.1663, 1.1640 and 1.1561. Further weakness could see the pair slides toward 1.1600.

To evaluate rule‑based execution for forex trading and cross‑asset strategies, try PlayOnBit's tools and streamline your approach with an AI trading bot designed for disciplined entries, exits and position sizing. Learn more at PlayOnBit.

Ready to put a rules‑based AI trading bot to work on your strategy? Visit trade assistant and the forex trading bot to see how automated trading can help you capture disciplined trades while you monitor macro catalysts.